I have read with interest the article penned by Frank Farrugia, president of the Chamber of Commerce, on the threat to the country’s ability to attract investment and thus am writing to pitch in some thoughts on the subject. 

As a matter of fact, I can concur with Farrugia where he argued about the importance that we maintain our competitiveness in response to the EU’s proposal to introduce new measures that are almost certainly bound to chip away at the country’s struggling competitive edge in the international investment arena.

The argument is that through the introduction of a number of family-friendly measures, the EU is promising the creation of millions of new jobs over the coming years.  The resulting question behind it is that since workers will have more free time to spend with their families and hence less time at their workplace, how will businesses cater for this absence and would they be bound to employ new people in order to keep up with their commitments in the short and longer term? 

Unfortunately, the reasoning is flawed since this will undoubtedly raise the cost of production while throughput will remain constant.  The unforgiving law of the market dictates that when costs of production rise, businesses become less competitive, so the chances are that they will be out-priced by the competition, leading to the re-organisations and ultimately job losses.

 With spiralling labour costs resulting from the country passing through a period of full employment and labour shortage, businesses will then be driven to invest in more automation to replace labour and maintain competitiveness.  Consequently, even in this scenario, jobs will be shed.  Hence the promise of new jobs through the implementation of such initiatives is evidently either false or flawed.

How can the European Commission, or national governments, be serious about striving to be more competitive than the competition when proposing that workers will be entitled to more paid time off their workplace? If businesses want to safeguard jobs by maintaining a constant level of output and productivity, they have to fork out the cost for more resources (in terms of people or capital) to compensate for the people whom them are already paying to stay home.

The answer is clearly in the provision of free care for children and extended family and not in paying workers to stay home. 

National structures have to be established in the same way that our country has been successful in doing with the nationwide free childcare schemes that have attracted praise from all and sundry. 

We need a shift in the EU’s approach to promote more investment in childcare and elderly care facilities plus fiscal incentives for working parents. This will give parents and carers the assurance that their dependents are well cared for, while they focus on their careers and professional development.

Why does the European Commission deem it so important to allow workers more paid time away from their jobs?

Moreover, decisions relating to leave entitlements for working parents and carers should be decided at a national level according to the respective member state’s traditions and economic circumstances with full consultation with the business community.

There are already family-friendly measures being adopted such as flexible hours and teleworking arrangements. Granted that some jobs can be performed from home particularly in the field of ICT, design, back-office, but this reasoning can scarcely be extended to other industries in the entire economy.

Presence of the workforce in core hours is crucial for efficiency. I can think of pharmacists, cleaners, drivers, construction workers, waiters, sales assistants, hair-stylists and practically anyone in the manufacturing sector, whose work cannot be carried out remotely and cannot be assumed to proceed unaffected by this proposal once it eventually goes through.

This means that this proposal will inevitably create discriminatory effects between companies in different economic sectors with resulting disproportionate results on small and large enterprises.

Besides, even if such companies decide to try to adapt and maintain business operations and employ further people, even on a temporary basis, to replace those who would become entitled to remain home, there simply is not enough skilled labour to employ.  Currently we are already experiencing great challenges in attracting the right talents to our work-places, having to resort to the international market to fill our productive vacancies.

With Malta experiencing near full employment in the last years, and a positive economic performance confirming a similar outlook for the short to medium term, the situation does not promise to improve in the near future.

In conclusion I’d like to ask why does the European Commission deem it so important to allow workers more paid time away from their jobs? The European Union is already one of the best places to live, to work, and to do business.

Notably, in the realm of social policy the EU is already a global leader. The European social model is known for a high level of redistribution and for a high level of social spending. The EU also has more than 70 legislative acts in the social field; thus, it already provides a wide range of rights to employees.

At this point I cannot but express my full agreement with the president of the Chamber in interpreting this move as a desperate attempt at pulling wool over the European public’s eyes and trying to regain popularity in a context that is only too clear to dismiss.

My appeal to the local authorities is one of caution and not to underestimate this issue and its overall potential impact on businesses, as ultimately it will be the country’s economy that will need to adapt and adjust in no small measure.

Patrick Cachia is chairman of the manufacturing executive group within the Malta Chamber of Commerce, Enterprise and Industry.